What’s the difference between a buyer’s and seller’s market?

Written by Posted On Tuesday, 30 October 2018 09:02

Several factors influence the housing market, including mortgage interest rates, inflation, employment, investment, construction, immigration, government assistance programs, and the health of local and world economies. All of these influence the supply and demand of the market which, in turn, affects prices.

There are three classifications experts use to describe the balance of supply and demand in the housing market:

Seller's market

A seller’s market is when there are more people looking to buy then there are homes available. This causes a rise in price above the long-term average rate of inflation. Typically this is indicated by a sales-to-active listings ratio of 20% or higher.

Buyer's market

In contrast, a buyer’s market is when there are many more homes for sale than there are buyers. As a result, prices increase slower than the long-term average rate of inflation. In extreme circumstances this can cause prices to decline. Typically this is indicated by a sales-to-active listings ratio below 12%. 

Balanced market

A balanced market occurs when supply and demand are about the same, with home prices rising in line with long-term average rate of inflation. Typically this is indicated by a sales-to-active listings ratio between 12% and 20%.

Summary

Over a sustained period of time:

  • a seller's market is represented by a ratio of 20% or higher
  • a buyer's market is represented by a ratio of 11% or lower
  • a balanced market rests between 12-19%
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Pete Caruso, Real Estate Expert

Pete has been a licensed real estate agent since 1998 and has represented buyers and sellers throughout San Diego County. Past clients include professional athletes, business owners, first time home buyers and sellers. Purchasing his first condo (unassisted) at age 23, becoming a landlord at 25, buying and selling 21 of his own properties, including vacation properties and out of state rentals, Pete has the experience of both consumer and REALTOR®. A Police Officer for over 31 years, Pete began and finished his distinguished career in Downtown San Diego. Witnessing the transformation of Downtown from burned out warehouses and vacant lots to the successful urban revitalization of today, Pete brings unmatched area knowledge to the San Diego market. Pete and his wife, Anna, live and own in the East Village at The Legend Condos and have lived in various parts of the County. Knowing the challenges and rewards of living in a suburban house, an Alpine horse property and a Downtown condo, Pete offers professional guidance from a local’s perspective no matter where you reside. Negotiation skills, problem solving abilities, attention to detail and an easy-going nature, Pete is the perfect fit for the discerning client who demands perfection. Memberships: Pete is a member in good standing with the National Association of REALTORS®, the California Association of REALTORS® and the San Diego Association of REALTORS®. All REALTORS® must subscribe to the NAR’s strict Code of Ethics, which is based on honesty, professionalism and the protection of the public. Community involvement: Pete gives back to the community by offering free dog training classes to his fellow Downtowners and volunteering at a local shelter. Pete has taught animal behavior seminars for the trainers at SeaWorld, The San Diego Zoo and Canine Companions for Independence. Pete has supervised the training for well over 100 Police Dog teams, along with dog handlers from the US Navy Seals. Business Savvy, Street Smart

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